The supercar that's electrifying the world

Made in Norfolk. Charged up in San Francisco. Financed by the billionaire who got the girl from St Trinian's. Live was the first British publication to test-drive the Tesla Roadster (pictured below)...

Driving the Tesla Roadster is, without question, the single weirdest experience you will ever have at the wheel of a car.

It will out-drag a Ferrari, hitting 60mph in just 3.9 seconds. The physiological effect on its driver is the same as in any other properly fast car – same raised heart rate, same sensation of being pushed hard back into your seat, same schoolboy desire to stop and do it all over again.

But everything else is different. You don’t have to make a rapid gear change every couple of seconds; you just stand on the throttle and go. You don’t have to wait for the engine revs to build before you really start to accelerate; instead, all the power is available instantly.

And, most bizarrely, there’s no deafening yell from the exhausts. Acceleration has always been associated with the noise of 12 hard-worked cylinders, but the Tesla Roadster is electric, so it does it all in absolute silence, except for the faint hum of tyres on Tarmac, and your own insane giggling.

This isn’t some far-off, far-out concept car.

Live was the first publication to test-drive it on British roads, and you can buy one now – as long as you have £92,000 and are prepared to join a queue of more than 1,000 millionaires.

Google founders Larry Page and Sergey Brin were among the first customers to get their Roadsters. So were George Clooney and Matt Damon, and they’ve just persuaded Leonardo DiCaprio to buy one, too. Flea and Anthony Kiedis from the Red Hot Chili Peppers, rapper Will.i.am, billionaire Larry Ellison and Arnold Schwarzenegger will all get theirs soon.

The Tesla Roadster, whose lithion-ion battery pack is one of the largest and most advanced in the world

But the Tesla Roadster isn’t just an oversized electronic gadget for the super-wealthy. This car has the potential to change the motor industry forever.

Until its arrival, most of the world’s big manufacturers regarded electric cars as a technological dead end. But the Roadster proves for the first time that electric cars can be more than just green – they can also be fast, sexy and practical enough to use every day, much like a Porsche. And if the waiting list is anything to go by, they may soon be as coveted as a Lamborghini.

The story of the company behind the Roadster is as incredible as the car itself.

Tesla has no pedigree in the car industry. Its founders and backers don’t come from the mighty world of motoring, but instead made their fortunes in Silicon Valley.

Its story links dot-com billionaires, an entrepreneur engaged to the young star of St Trinian’s, iconoclastic inventors, Hollywood glitterati and a venerable British sportscar maker.

From left: the recharging socket; Ben Oliver fills up at a 'Juice Point' in central London; the cable plugs in beneath the usual filler cap

Tesla has not only overcome major technical challenges and convinced sceptical venture capitalists that we’re ready to plug in rather than fill up, but it has also overcome major internal arguments, which at times have looked serious enough to sink it – and which resulted in its original driving force being ousted from the company he created.

It’s perhaps the first time a start-up has built a car that has left the world’s major manufacturers racing to catch up. Your next car might not be electric, but thanks largely to Tesla, the one after that probably will be.

The Tesla Roadster on the streets of London

Tesla is planning to sell its technology to at least one of the car giants to use in electric cars we’ll all be able to afford.

The fee for its intellectual property will be massive, the impact on global warming and our addiction to expensive, dwindling oil potentially even greater – and the rewards for its backers in the billions.

The story starts in late 2002. Martin Eberhard, now 48, was a Californian electronics and software engineer who two years previously had sold the e-book company he founded with software engineer Marc Tarpenning in a deal worth $187 million.

Tall, thin and with rapid-fire speech that struggles to keep pace with his supercomputer brain, he was embarrassed by America’s refusal to sign up to the Kyoto Protocol on climate change, angered by the war in Iraq and determined that his next project would tackle global warming and America’s dependence on imported oil.

He began to examine the alternative fuels the big car makers were backing, such as hydrogen and biofuels, and after doing his own calculations quickly rejected all of them.

‘What surprised me was that electric cars were substantially more efficient than everything else out there, so in 2003 I began to look at how you go about starting a car company,’ he says.

Electric cars have been the future before; they’ve been around as long as the car has, but have never been made to work very well.

The problem has always been battery life. The Reva G-Wiz city car, for instance, with its old-tech lead-acid batteries, will struggle to cover more than 40 miles before needing to stop for an overnight recharge.

But why use old technology?

Eberhard decided he could overcome the problem by sticking thousands of the powerful lithium-ion batteries used for our mobile phones and laptops into one big power pack.

His new car would be as fast as a supercar, but also have a range of around 250 miles, and take just three hours to charge.

Arnold Schwarzenegger at the Tesla workshop earlier this year

There were, however, two major problems – making the batteries work together without overheating would be difficult, and the car would be hugely expensive.

In a breakthrough, Eberhard realised that electric cars didn’t have to compete with Ford Fiestas; at least, not at first.

Instead, he could produce an electric car that would be like the new, high-end electronic gadgets he’d made his fortune with – desirable, expensive and rare.

The early-adopting, green-obsessed gear-heads who lived around him in the San Francisco suburbs had already bought Toyota Prius hybrids – but they had Porsches and Ferraris locked away in their garages.

Dot-com billionaires, it seemed, wanted to be seen to be green, but longed for something sexier.

Eberhard knew that, like every other new gadget, electric cars could be made less expensive with time and volume, with those first customers subsidising development.

Tesla founder Martin Eberhard (left) and Elon Musk, billionaire investor and now Tesla CEO, at the Roadster's launch two years ago

In summer 2003, he founded Tesla Motors with Tarpenning.

At first it was just the two of them in a two-room office, trying to achieve something staggeringly ambitious. The idealistic duo were setting out to build not only a new sportscar, but one using a radical new means of propulsion that, according to other car makers, could not be made to work.

‘There is a certain “we can do this” arrogance in Silicon Valley,’ admits Tarpenning.

‘But all entrepreneurs need a bit of that, because if you really understood how difficult this stuff is, you would just never do it.’

The old friends had two things going for them.

First, they realised that trying to design the entire car themselves would be impossible. So they turned the usual sportscar-start-up model on its head.

Instead of buying the engine and building the body, they’d do the opposite. They would devise the electronics, but the design and construction of all the conventional components would be outsourced to someone else – a company that knew how to do it.

For this, Tesla chose Lotus. The British sportscar maker might be better known for its illustrious Formula 1 history and the iconic Esprit supercar, but it makes at least as much money by selling its engineering expertise.

The Tesla would be based on the diminutive Elise – Lotus would build the entire car apart from the battery and electric motor, and ship these engineless ‘gliders’ to California for completion. The world’s most advanced sportscar would be born, bizarrely, in rural Norfolk.

Building the power pack was a major hurdle. Laptop batteries using the same technology have been known to overheat, forcing several big computer firms into a series of recalls two years ago. Any accidents in the new car would have been a PR disaster.

Tesla got around the problem with clever software that constantly monitors and balances the 6,831 individual cells, and a bit of lateral thinking. If the passengers could be kept comfortable by the air-conditioning system, why not the batteries too? So the same unit was used to chill both the cabin and the liquid coolant for the batteries.

If you're selling a car for $100,000 it had better be bloody good. If we delivered a car that had lousy performance we'd be another delorean

Tesla’s second big advantage was access to money – and the company would need plenty of it to develop the car.

Tesla is what’s known as a ‘cleantech’ start-up. The term refers to new, energy-saving technologies.

Whether we want to cut our dependence on oil imported from unstable regions, save money or save the planet, consumers and businesses are desperate for them, and governments are offering fat tax breaks and subsidies for those who can make them work. Some think the cleantech boom will come to dwarf the internet and biotechnology combined.

The venture-capital firms that made billions from the internet are now piling their cash into cleantech.

Last year, $2.2 billion was invested, and the figure is expected to be even higher this year, despite the global downturn. If you’re saving energy, you’re also saving money, and cleantech investments are widely thought of as at least recession-resistant, if not recession-proof.

In Silicon Valley it might now be the new internet, but in 2003 the venture-capital firms hadn’t yet bought into cleantech.

‘Back then the only electric vehicles you could buy were golf carts, and the VCs couldn’t imagine themselves wanting to buy one of those, so it was a very uphill battle at that time,’ says New Zealander Ian Wright, who had joined Eberhard and Tarpenning to help engineer the car and raise the funds.

And then they met Elon Musk, one of the most extraordinary characters in Silicon Valley.

Now 37, the South African made two fortunes in the dot-com boom. Aged 28, he sold the online publishing company he founded to Compaq in a deal worth $341 million. He then founded an online banking business which acquired PayPal, and in 2002, aged 31, he sold it on to eBay for $1.5 billion.

His most ambitious project is to try to establish a human colony on Mars, and to that end he founded SpaceX, a company designing and building the low-cost, reusable rockets that he believes will get us there. It may sound mad, but Musk has signed hugely lucrative contracts to provide launches for Nasa and the US Air Force.

In addition to all his business ventures, he has five children from his first wife Justine, and is now engaged to 23-year-old British actress Talulah Riley, star of St Trinian’s and Pride And Prejudice.

The Roadster's luxury interior

When he met Eberhard, Musk was already investigating electric cars, both as an investor and as a serious car enthusiast – he had a Porsche 911 Turbo, a Jaguar E-type and a McLaren F1 in the garage of his Bel Air mansion.

‘We met Elon and after one two-hour meeting he said, “Yes, I’ll do it,”’ says Wright. ‘If he hadn’t been building rockets he’d have been doing it himself anyway.’

Musk wrote the first of a series of cheques that now add up to $55 million, and he became chairman of Tesla.

It wasn’t a traditional deal, drawn out by due diligence and legal wrangles. That’s not Musk’s way.

‘He was very quick,’ recalls Tarpenning. ‘He said, “I’m in, we’ll draw up the paperwork, but we have to close it in three weeks, because my wife is having twins and if we don’t get it done by then it’s not going to happen.”’

But perhaps their courtship should have been longer. Eberhard and his new investor were very different characters.

‘Elon is very softly spoken and gentlemanly and almost shy and retiring; Martin is the life and soul of the party. He has an opinion on everything, and you’re going to hear it,’ says Wright.

Musk had no intention of being a silent partner.

He phoned Eberhard at least every couple of days, sharing ideas on new materials that he was using in his rockets, and flying to San Francisco every six weeks for board meetings in his $30 million transcontinental Dassault Falcon 900 private jet. This was all good fun at first.

‘Elon has a pretty expansive lifestyle. He lives in southern California, but he’d jump in his jet and fly up here at a moment’s notice. When we were trying to recruit some pretty high-level people from Detroit, Elon flew his jet here, picked us up and took us along to meet those people.’

The first Tesla showroom in Los Angeles

Eberhard says, ‘It was surreal. I’d go to visit him in my Mazda 3, and we’d go for a drive in his McLaren F1.’

Musk also got his seriously wealthy friends involved. Google’s Larry Page and Sergey Brin became investors, as did Jeff Skoll, the billionaire first president of eBay. Skoll’s new film company Participant Productions was making Syriana and Good Night, And Good Luck with George Clooney at the time. Skoll sold a Roadster to Clooney and the press started to take an interest. Suddenly, with its sexy product and celebrity endorsement, Tesla became an ambassador for the cleantech industry.

The venture capitalists who’d laughed at its founders in 2003 were now lining up to invest; Musk led a series of funding rounds that raised $150 million, far more than any conventional new car company could hope to secure.

But a major rift was starting to develop between the CEO and the chairman. Eberhard wanted to keep the Roadster simple, stick to an incredibly tight schedule, get the car into production on time and introduce new ideas later as upgrades, just as the technology industry does.

Musk took a different view. Tesla was already working on plans for its next electric car, the more practical, affordable Model S hatchback, which it hopes to sell for around $59,000. It aims to build 15,000 a year from 2011, which is nearly ten times the planned output of the Roadster, and will require at least double the investment.

Even in the cleantech boom, the venture-capital firms would need some convincing to write cheques that big. Musk saw the Roadster not just as a model in its own right, but as proof to his investors that Tesla was a serious car company.

‘If you’re going to sell a car for $100,000 it had better be a bloody good car,’ says Musk.

‘I was insistent that we had to deliver a car with outstanding performance. If we delivered a car that had lousy performance we’d be another DeLorean. Either we build a great product and sell a lot of them and earn the right to raise sufficient capital for future cars – or we fail.’

So the perfectionist Musk began to ask for a series of changes.

Each change added more costs and delayed production. He wanted the door handles replaced with touch-sensitive microswitches at a cost of $1 million. When his wife struggled to get in and out of the car elegantly in a skirt, he asked for the doorsills to be lowered. This meant redesigning the advanced, ultra-lightweight bonded-aluminium ‘tub’ in which the occupants sit and which provides the car’s core structure – an added cost of $2 million.

To make the Tesla look, feel and smell more like the Porsches with which it was competing on price, he had the dashboard trimmed in leather for another $250,000.

To cut weight and increase acceleration he had the bodywork hand-made in carbon fibre, adding $3,000 to the cost of each car.

'He would come in and get worked up about one particular thing on the car. He would get all fired up about door latches without contemplating their importance compared to the more difficult problems we had to solve.’

When I met Tallulah she asked what I did and I said, 'Rockets and cars.' She liked both. In fact, the Tesla was critical in our romance

And Eberhard was struggling with a major problem – the gearbox. It must have been immensely frustrating to the creators of this very 21st-century car that their biggest problem was a very 20th-century piece of technology.

The Tesla’s transmission should have been simpler than most. Other supercars need six or more gears to provide both that rush of acceleration from a standing start and a high top speed. Tesla targeted a 0–60 time of under four seconds and a top speed of 125mph; the latter could have been much higher, but would have required changes to the car’s suspension and aerodynamics that would have reduced its efficiency and driving range.

An electric motor generates torque – the twisting force that governs acceleration – instantly, without having to wait for revs to build as a conventional engine does. The Tesla Roadster only needed two gears to hit its performance targets.

But two designs from gearbox specialists failed to cope with the huge torque and couldn’t be made to last more than a few thousand miles before disintegrating. The problem cost Tesla at least $5 million and delayed the project by months.

Despite all the niggles and the increasing tension between the chairman and CEO, the Roadster was officially launched at a grand party in a hangar at Santa Monica Airport in July 2006. Arnie was the guest of honour.

But as the publicity stretched the waiting list, it was clear the car was going to miss its planned production start date the following month, and the costs had spiralled from $55,000 per car to at least $80,000.

As CEO, Eberhard was responsible for getting the Roadster ready for production on time and on budget. Clearly he was missing his targets – but he argues that he was cut no slack for the risky, costly enhancements he’d reluctantly agreed to, and that the board wouldn’t allow him to hire a head of finance or operations to ease his workload as CEO.

Production was delayed by a year-and-a-half. Musk and Eberhard are each adamant that the other was to blame, but Eberhard insists there were no rows with his biggest investor.

A cutaway of the rear, showing the 115lb engine and the battery pack

‘My relationship with Elon was really good until the very last minute,’ he says. ‘He might portray this very differently, but he and I were on good speaking terms until the day last August when he called me to tell me I wasn’t CEO any more. That was totally unexpected. It was a whack on the side of the head.’

Musk says, ‘I allowed him to run the company far longer than I should have. To save Tesla I had to make a substantial investment in the company.

'At the end of last year it needed a $40 million cash injection to avoid certain death, of which I provided half. And what added salt to the wound was that he twisted the story to blame me in a few situations, which was truly outrageous.’

Eberhard directly refutes this, countering that Tesla was deluged with offers of funding.

‘There were lots of investors who were very, very hot on putting in a large amount of money,’ he says. ‘We were the darling of the cleantech industry.’

Eberhard was demoted to president of technology and, along with Tarpenning, finally left Tesla last Christmas. The future of the company he co-founded is now in the hands of the man who ousted him.

Production of the Roadster began in March, and since then just over 30 have been made. Last month, Musk took control of daily operations by appointing himself CEO, and announced job losses, reducing the staff from 380 to 300, and a six-month delay to the Model S as he tries to make the company profitable sooner.

Raising more funding in the next few months may prove difficult even for Tesla.

But in the long term Musk remains optimistic. ‘We’ll stay independent for quite a while,’ he says.

‘If I think that selling to a larger car company would accelerate the advent of electric vehicles, then that would be the reason I’d sell – not in order to capture a large amount of money.

'The domestic car companies couldn’t afford Tesla, but the Japanese or German car companies, or conceivably the South Korean or Chinese car companies, could afford to pay a big price tag. But what would I do with the money? Just look at it in a bank account?

‘I’m not sure I’d want to put an exact figure on Tesla’s value, but I can say with some degree of confidence that Tesla is likely to be worth billions of dollars in the future, particularly once we bring the sedan to market.’

In the meantime, Musk has sold his McLaren F1 (for a large profit, naturally) and is enjoying some unexpected benefits of owning a Tesla Roadster, and the company that makes it.

‘If you want to get the girl, this is the car to do it in. If you go to a party and you’re competing with guys with Ferraris, in Los Angeles the one with the Tesla will get her. When we met, Talulah asked me what I did and I said, “Rockets and cars.”

'She liked both, and when she arrived in LA I picked her up in the Tesla, which she liked a lot. It was critical in the romance. In fact, it probably wouldn’t have happened without the Tesla.’

Unsurprisingly, Musk and Eberhard no longer speak.

Eberhard has made clear his views on the company’s current management on his blog. Otherwise, his involvement with the company is limited to driving his Roadster – grey with orange stripes – around Silicon Valley.

‘It’s in the workshop right now,’ he says ruefully, ‘having one of those door switches fixed.’